Entrepreneurs can raise €90k per project via crowdfunding

Over the past 5 years, crowdfunding has shown an exponential growth from €14 million in 2012 to €128 million in 2015, according to a report recently released by crowdfunding consultancy firm Douw & Koren (D&K). More than 3,500 projects were successfully funded in 2015, including community (1247) and creative (856) projects, consumer loans (374) and companies (1208).

Notably, financing for entrepreneurs (start-ups and SMEs) has raised the biggest so far with an average of €90.000 per project. From D&K’s report, it’s indicated that crowdfunding is the fastest and easiest way to finance a project- be it for personal, social or entrepreneurial reasons.

Crowdfunding is accompanied by new challenges as it enters into a new phase of growth in the Netherlands, says D&K. Among these challenges, and where opportunities remain, are as follows:

1. Awareness is high among entrepreneurs in the Netherlands but action is low. According to D&K’s survey, 78% of Dutch entrepreneurs said they know about crowdfunding, but only more than 1% had actually used crowdfunding platforms.

2. The growth of crowdfunding is determined by the quality and transparency of crowdfunding platforms, which is still not the case in the Netherlands. if handled responsibly by stakeholders, associations, ministries and regulators, the demand and growth of crowdfunding will surely continue.

3. Banks consider crowdfunding as an additional form of financing, but there remains a limited place for collaboration. Clear agreements in terms of referrals and combined financing, among others, are needed.

4. The Netherlands Authority for the Financial Markets (AFM), which supervises the financial markets on savings, investments, insurance and loans, finds it important that crowdfunding gets the opportunity to grow in a sustainable and responsible manner, and that adjustments (including legal framework) are necessary. Over-regulation, however, may post a big concern especially for key investors.